How Credit Aware is Your Business?

Posted on by Rich Wells

Estimated read time: 4 mins

This week is Credit Awareness Week and Experian is proud to support it for the second year running1.  You see, we believe that a sound understanding of how credit scores can impact your business is vital but it’s also an area which is often ignored.

It’s understandable of course.  If you’re battling the day to day problems of tight cash flow, late paying clients and you know… running a business, then credit scores may well be the farthest thing from your mind.  Here’s why they shouldn’t be…

Three Benefits of Regularly Checking Your Business Credit Score

When did you last check your Business Credit Score? It doesn’t take much time, but regularly monitoring your own business’ credit report can have significant benefits2.

  1. Spotting the Early Signs of Financial Difficulties

    Poor cash flow isn’t always a sign of financial problems, but it can be and your Business Credit Report can help you to identify any potential risks or issues that may be impacting your financial position. It gives you a view of what your lenders are recording about you and your business and this allows you to manage that information to make sure that you aren’t viewed as a risk by your own suppliers and lenders.

  2. Avoiding High Interest Rates

    Should you need to seek investment or credit for your business, your Business Credit Score will play a fundamental part in determining the rates you’ll be able to get. Simply put, the better your score, the better the rates you’ll be offered and for bigger loans and mortgages, that can mean a difference of thousands of pounds in repayments so it’s worth staying on top of things by checking your score regularly.

  3. Avoiding Rejected Credit Applications

    Perhaps the most obvious reason to check your business credit score is to avoid rejection.  No one likes to be rejected after all! Seriously though, if you’re seeking credit to support or grow your business then a ‘no’ from lenders can have big implications – and all too often, it could be avoided by doing your due diligence when it comes to checking and managing your score before you apply.

Take steps to improve your own business credit score and unlock opportunity with Experian’s My Business Profile

Three Benefits of Using Credit Checks with Clients and Suppliers

We’ve all undergone a credit check at some point – whether it be in our business or our personal lives.  But how often do you use this tool for your own business?2

  1. Avoiding the Risk of Bad Debt

    There’s nothing more frustrating than a client who doesn’t pay you on time – or worse still, one who just doesn’t pay at all.  A simple credit check before entering into a business relationship can help you to identify potential poor payers and to only work with those who are most likely to keep to the terms of your agreement.

  2. Avoiding Expensive Debt Collection

    Once debts start going bad then chasing and collecting any amounts due can be a costly and time-consuming business.  Instead, a quick and simple credit check helps you to weed out financial risk and to focus your time and energy on nurturing more positive relationships instead.

  3. Avoiding Reputational Damage

    Credit checking also allows you to get real insight into how businesses run their financial affairs – whether they have county court judgments or even bankruptcies on their records.  It’s also possible to access details on directors and the people behind the business, so you can be absolutely sure before you choose to associate your business with another.

Experian Business Express provides you with an easier way to understand the financial situation of the companies you trade with. With detailed, up-to-date information on businesses, directors and company groups, you can make smarter business decisions.

 

1 www.creditstrategy.co.uk/creditawarenessweek
2 www.accountingweb.co.uk/business/finance-strategy/cracking-the-credit-checking-conundrum

 

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